China and the World of Business • China Business and the World

Month: May 2005

The San Francisco Chronicle, once again earning its sobriquet of “Pravda-by-the-Bay,” published an article on tomorrow’s Hua Yuan Science and Technology Conference in Santa Clara. As a part of that interview, it published two quotes that a little healthy journalistic skepticism might have questioned, and turned into a better story.

First, the reporter, Vern Kopytoff, couldn’t even bother to get the name of the organization right (he spelled it “Hua Yan.” Hello? Fact check? As an aside, he also missed the point that Hua Yuan is a modern-day equivalent of a Chinese self-help association that taps U.S. companies with lots of money and big China aspirations for support. Dig a bit there, boy. There’s an interesting story here…Is this organization legit and above board, or is there something Masonic happening here?

Second, Mr. Kopytoff dutifully took down every word when Fang Deng, the VP for Strategy of Juniper Networks, regurgitated the standard party-line that:

U.S. firms expanding Into China can’t expect immediate success. Rather, it could take a U.S. firm years to turn a profit after learning the Chinese way of doing business.

With respect, wrong on two counts.

Companies don’t have to spend years to build a business in China. If they hire smart people and get professional advice they can accomplish a lot it a little time. It’s the ones that assume they need to lose money and be stupid for 3–5 years that never seem to get their business in China off the ground. Your average well researched, well-thought out business plan that incorporates the kind of savvy a company SHOULD have before investing a nickel in China should be cash-flow positive within 18 months.

That does NOT mean that there is some special Chinese way of doing business. Now, the locals will try to convince you of that – they’ve been singing that tune for over a century, and to a culture-shocked executive from San Jose or Dayton, that sounds reasonable. It’s also the first step toward disarming you and then taking you for all you’ve got.

Any U.S. executive (and I count Mr. Deng as one, despite his surname) who tries to convince you otherwise either a) buys into that because he’s trying to justify his company’s own crappy performance in China, or b) is being disingenuous and saying that in the hopes that his competitors are listening and won’t try to come into China. Given Juniper’s more than satisfactory performance in China, I would vote for him spreading disinformation.

I don’t blame Mr. Kopytoff for that oversight. I blame the Chronicle for sending a reporter who clearly does not have enough knowledge about China to write a decent story. Which of cours assumes the Chronicle even has a reporter who understands that there are differences between Stockton St. and Jianguomenwai Avenue.

It gets worse.

Then we have Charles Zhang, CEO of Sohu.com, who proceeds to dis U.S. Internet firms in China, suggesting they’re not doing quite well. One would think that the reporter would hear a voice in his head saying “hmm, but this is a guy talking about his competition. Of COURSE he’s going to say that.”

No evidence of healthy, journalistic skepticism.

No wonder more people are turning to blogs for information and ignoring traditional media.

Trying really hard to look like they’re working on this deductible junket, 379 advertising execs at a conference in Bermuda told each other how worried they are about the way the advertising business works.

There was a lot of talk about how to fix the advertising business, but apparently nobody had the cojones to come right out and ask the big question (is advertising doomed?), much less give the right answer (yes) and begin talking about what would take its place.

Hint 1: Stop having these stupid conferences. If you take 379 attendees, multiply by around $6k apiece ($1,700 to attend, 5 nights hotel at an average of $320 a night, airfare, food, entertainment, etc.) and figure $1500 a day in lost work time. Call it an even $4 million that it cost the industry, or commissions on $23 million in billings.

Hint 2: The industry is in love with creativity. Get over it. It’s about results, guys, now winning awards for the cleverest or best-looking ads